10 Universities Spending Billions on R&D

U.S. universities and colleges spent a combined $68.8 billion on research and development in 2015. R&D spending is highly concentrated among the top research universities, with the top 20 schools accounting for more than 30% of all research expenditure among institutions of higher education in the U.S.

To identify the universities investing the most in research and development, 24/7 Wall St. reviewed R&D expenditure by university for the 2015 fiscal year with data from the National Science Foundation. Of the 1,871 major colleges and universities reviewed, 10 schools spent more than $1 billion on R&D.

Before World War II, university research was primarily funded by local industry, nonprofits, and the university’s internal funds. World War II, however, created a need for increased scientific research. The National Defense Research Committee was formed in 1940, funding such notable research as the Manhattan Project and establishing the current model of federal funding for university research. Today, a range of departments, including the Department of Health and Human Services, the Department of Defense, and the National Science Foundation, fund university research.

Federal funding currently accounts for the largest portion of R&D funding for many of the largest research universities. In seven of the 10 universities spending more than $1 billion on R&D, federal funding accounts for more than 50% of all R&D expenditure.

The reliance on federal funding for universities has been declining, however. In 1972, the federal government funded 69% of university research budgets. By 2015, federal R&D funding accounted for just 55% of total university research spending, the lowest share on record.

The decline is not due to reduced federal R&D funding, but is rather the result of an expansion of nonfederal funding sources. R&D funding from businesses, nonprofits, and university coffers has increased at twice the rate of federal funding since 1972.

R&D at the top research universities is heavily concentrated in the life sciences and engineering. Of the $68.8 billion spent on R&D by all U.S. colleges and universities in 2015, 56.5% was dedicated to the life sciences — primarily medicine — and 16.1% to engineering.

Universities receiving the most federal funding for engineering R&D often have a University Affiliated Research Center on campus. The Applied Physics Laboratory at Johns Hopkins University, for example, was established by the Department of Defense in 1942 and accounted for $1.3 billion of the university’s $2.3 billion R&D expenditure in 2015. While most universities that receive large amounts of federal R&D funding do so through grants, the APL at Johns Hopkins is primarily a defense contractor. Other DoD-funded UARCs exist at the University of Washington, Penn State, Georgia Tech, and 10 other universities.

R&D spending tends to correlate with innovation. Seven of the 10 universities spending more than $1 billion on research annually are also among the 10 universities that were awarded the most patents in 2015. The University of California system, which contains three universities that each spend more than $1 billion on R&D, was awarded 489 patents in 2015 — at least 200 patents more than any other university.

To identify the universities receiving the most federal funding, 24/7 Wall St. reviewed the total R&D expenditure for 1,871 major universities for the 2015 fiscal year from the National Science Foundation. Total R&D spending by each university, the academic departments receiving funds, and the sources of federal funds by federal agency also came from the NSF. University endowment data came from the National Association of College and University Business Officers and are for the 2016 fiscal year. Enrollment figures were gathered on a case by case basis from university websites, and are the most recent fall enrollment figures provided by each institution.